Rising demand in a slowing economy

While the economy has taken its toll on many parts of the plastics industry, suppliers to the medical and packaging sectors are seeing increased demand and even some shortages of key products.

Covestro AG's polycarbonate film plant in Deerfield, Mass., reported it saw a year's worth of orders in just two months. Spartech LLC has been running at full capacity, with lines used to make parts for medical face shields and intubation boxes running around-the-clock. Packaging giant Silgan Holdings Inc. saw demand rise by at least 5 percent for its plastics closures and containers.

"There have been some imbalances, with some markets impacted more than others," said Bret Bement, North American petrochemicals supply chain director with BASF, during an April 16 webinar hosted by Petrochemicals Update and the Reuters news service. "Automotive is down, but other markets like [information technology] and health care are relatively strong."

He added that because BASF has many integrated facilities making numerous products, "some materials have been sold, others are still trying to find homes."

Paul Jepson, specialties logistics operations director for Saudi Basic Industries Corp., agreed that the COVID-19 market is two-sided.

"Auto customers are closed, but health care with disaster-related orders is seeing demand as good as ever," he said.

For Covestro, plants including Deerfield and Newark, Ohio, are seeing a surge.

"Some of these medical compounds are standard products for us, but we've seen changes in order sizes and timing," Rich Rogers, plant manager at Covestro's compounding plant in Newark, said in an April 22 interview. "We're getting a lot of rush orders for larger amounts than usual."

The Newark plant is working to supply polycarbonate-based compounds used in medical products ranging from drug delivery devices to oxygen concentrators and insulin pens.

The plant also has been challenged by some customers making medical products for the first time.

Deerfield is running 24 hours to make the film, which provides a flexible protective barrier against respiratory spray and droplets. Officials said that Covestro "is tapping its global presence" to meet increased orders for the shields.

Covestro's Newark plant recently was able to complete a color match and begin producing material for a ventilator part in 48 hours. "We pride ourselves on our color capability," Rogers said.

The plant, which employs 150 Covestro workers and 50 contractors, also hasn't been at full staffing during the crisis.

"We've never been more than 10 percent down, but some people have been missing for health conditions if they're at risk," Rogers explained.

Covestro also made efforts to show employees that working in the plant was safe by using touchless equipment and temperature screenings. "We made sure to let them know what our mission is and where our products are going," Rogers said.

Packaging giant Silgan posted record sales for the first quarter of the year, driven by consumer demand as the coronavirus pandemic spread globally.

"Let me start by saying how saddened we are by the global loss of lives and economic uncertainties resulting from the current [COVID-19] crisis and how inspired we are by the first responders and health care professionals on the front lines," Chairman and CEO Tony Allott said in announcing the company's quarterly results on April 22.

"Our business has been declared essential under the guidance of the U.S. Department of Homeland Security and has received similar designations from [most] other governmental agencies in the geographies in which we operate, and we take that responsibility with pride and commitment," he added.

Allott also said that "given the critical nature of our products and due to the fortitude of our employees, we exceeded our expectations driven by record volumes in each of our businesses."

Silgan also made one-time incentive payments to its plant employees during the COVID-19 crisis.

In spite of "unprecedented uncertainties," Allott said that Silgan expects to be able to keep its plants operational and has increased its earnings estimate and range. Officials said that the increased estimate is driven by anticipated continued higher demand for food and consumer health products used principally in the home, partly offset by declines in products used primarily in public venues.

According to Plastics News' most recent rankings, Silgan is North America's eighth-largest blow molder, 10th-largest injection molder and 22nd-largest thermoformer.

Sales volumes in Silgan's closures unit — including pumps and sprayers — was up 5 percent for the quarter, with plastic containers unit sales volumes up almost 6 percent. Officials said the plastic container volume increase was due primarily to higher demand for food and consumer health products starting in March as a result of a spike in consumer demand in response to COVID-19.

In addition to its normal sales channels, Spartech is supplying clear sheet to longtime customer Duo-Form Plastics, which is using it for intubation boxes and safety shields.

Spartech, a Maryland Heights, Mo.-based sheet extruder has supplied materials to Duo-Form, an Edwardsburg, Mich.-based thermoformer, for many years, particularly for the RV and transportation markets. So when the COVID-19 crisis emerged and Duo-Form began seeking materials for personal protection equipment, it was a "natural fit," Todd Niemuth, market manager in health care for Spartech, told Plastics News in a recent interview.

"Based on our long-term relationship, they knew they could rely on us for a quick supply of clear materials — it was a natural fit to work with them on their applications," he said.

A clear PC product called DuraGard will be used in Duo-Form's intubation boxes and retail safety shields. The material is strong and thick gauge and will offer protection for medical and health care facilities. DuraGard can also be used in sneeze guards in retail and grocery stores.

Duo-Form's intubation boxes, made with Spartech's UltraTuf glycol-modified PET sheet, will provide additional protection between medical staff and patients when endotracheal intubation is needed for patients infected with COVID-19. The box can be kept over a patient's head when being moved to different units. The PETG material will also be used in Duo-Form's face shields.

Prior to the pandemic, Spartech already had customers that made face shields for medical and industrial applications.

"Like Spartech, our main objective is to protect health care workers as we work together to end this global pandemic," said Mike Gonser, director of new product development for Duo-Form.

Spartech has deployed several additional lines to help meet demand for various materials like face shields, retail barriers and home disinfectants.

The main products used for personal protective equipment are clear, and Spartech has a broad portfolio: amorphous PET, PETG, polycarbonate, acrylic and cellulose acetate. Four of the company's 15 manufacturing facilities can produce the clear materials: Sheboygan Falls, Wis.; Muncie, Ind.; Greenville, Ohio; and Newark, N.J.

"We've got a great working relationship with our raw material suppliers, and our procurement team is working together with our suppliers — to date we haven't had any issues," Niemuth said. "It's been more than sufficient with output, even with adding multiple extrusion lines using these materials."

The company has taken many safety precautions. Strict social distancing measures and PPE devices are required in all 15 Spartech facilities. Increased sanitization and disinfecting are being done, and employees are monitoring their temperatures. Special protocol is being used for delivery trucks and visitors coming to a facility. The company employs about 1,500.

The company has experienced "very limited" instances of the virus, but in those instances the facility where the worker was employed has closed temporarily and been sanitized.

"Very little is normal given the current coronavirus situation. I'm really proud of all of our employees and we have to make sure we are using those COVID-19-related measures," he said. "If we don't keep them safe and healthy, we can't support our customers. Our employees have really stepped up; we cannot thank them enough."